A transit agency staffer emails:
I always keep up to date with your blog, and I was wondering if you have any information on revenue/cost ratio calculations on an individual route basis?I am hoping to conduct revenue/cost calculations on individual routes at [our agency], however we have never embarked on such an exercise on a route by route basis, and I have a general idea of how such calculations are done. But I still have some lingering questions.Also, what is your opinion on such calculations? Do you feel they are a helpful tool? Coming from [City x], I have had them drilled into me from when I first got interested in transit, as cost recovery is a big topic [there]. But I notice other areas don't seem to be as interested in it.I was hoping it would be a good tool to show which routes have high recovery ratios and therefore may not only a small amount if any government funding for improved services.
In interconnected urban networks I strongly recommend against emphasizing fare revenue by route, as it creates the illusion that the revenue of each route is an independent result of that route's service. In other words, it conceals the crucial network effect — how routes achieve their outcomes only by working together. If you have financial managers who don't have transit in their bones, they can easily fall into the illusion that the routes are like independent products — different cans on a grocery shelf — and this can lead to some poor decisions.
If the managers really understand interconnectedness in transport networks, then they may find the info useful, but I am still reluctant to prepare data outputs that are likely to be published without their explanations, and this one can be very misleading if you dont' bring that element along.
Costs can also be interdependent if you have a lot of through-routing or complicated operational interlining.
If costs feel reasonably interdependent by route, cost/rider is a better metric to focus people on. This metric values all riders equally, whereas fare revenue by route undervalues transferring passengers and therefore undervalues the interdependence on which great transit networks and their cities thrive.